If you owe any amount of money in taxes to the IRS, you must make sure you pay up your debts as soon as possible. If you do not do so, the IRS will send you notices of payment and reminders to get you to pay up. Whatever you do, do not ignore the IRS notices. The longer you delay paying up, the more interest and penalties you will accrue. But if you already have tax debt that you find difficult to pay in full, here are some ways you can clear your debts (and thereby avoid legal action by the IRS):
1. Pay in installments
This is the most straightforward and common method to clear tax debt. Contact the IRS and negotiate with them the minimum installment amount you need to pay. You will need to enter into an agreement with the IRS on this arrangement.
2. Partial payment installment
If you are unable to make the required payment under the installment plan, this option lets you make smaller monthly payments. Under this agreement, it is also possible to pay less than the original tax amount.
3. Be declared currently uncollectable
If you are experiencing temporary financial difficulties that prevents you from paying your taxes, your taxes can be declared currently uncollectable. This is subject to a review of your financial situation by the IRS. If they are convinced that your financial difficulties are actually prohibiting you from clearing your tax liabilities, then they will declare your case uncollectable for the time being and then review your financial situation again at a later date. Once your financial problems alleviate, the IRS will resume collection efforts.
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4. Make an offer in compromise
And offer in compromise is where you offer to pay the IRS less than the total amount of taxes you owe. Obviously, there are certain criteria you need to fulfill in order to qualify to make an offer in compromise. If you meet the criteria, you can make your offer and settle your total tax bill for less than what you are liable for.
5. Waiver of penalty
Waiver of penalty is also called penalty abatement and means that penalties can be waived from payment that accrued on the overall tax amount due. Depending on your total tax liability, this waiver can come up to a lot of money.
For more information on how to clear your tax debts, call us at (813) 229 7100 for a free consultation.